ACT NO.

2031 (a) authorizes the sale of collateral securities in case the instrument
be not paid at maturity; or
February 03, 1911
(b) authorizes a confession of judgment if the instrument be not paid
THE NEGOTIABLE INSTRUMENTS LAW at maturity; or
I. FORM AND INTERPRETATION (c) waives the benefit of any law intended for the advantage or
protection of the obligor; or
Section 1. Form of negotiable instruments. - An instrument to be
negotiable must conform to the following requirements: (d) gives the holder an election to require something to be done in
lieu of payment of money.
(a) It must be in writing and signed by the maker or drawer;
But nothing in this section shall validate any provision or stipulation
(b) Must contain an unconditional promise or order to pay a sum otherwise illegal.
certain in money;
Sec. 6. Omissions; seal; particular money. - The validity and
(c) Must be payable on demand, or at a fixed or determinable future negotiable character of an instrument are not affected by the fact
time; that:

(d) Must be payable to order or to bearer; and (a) it is not dated; or

(e) Where the instrument is addressed to a drawee, he must be named (b) does not specify the value given, or that any value had been given
or otherwise indicated therein with reasonable certainty. therefor; or

Sec. 2. What constitutes certainty as to sum. - The sum payable is a (c) does not specify the place where it is drawn or the place where it
sum certain within the meaning of this Act, although it is to be paid: is payable; or

(a) with interest; or (d) bears a seal; or

(b) by stated installments; or (e) designates a particular kind of current money in which payment
is to be made.
(c) by stated installments, with a provision that, upon default in
payment of any installment or of interest, the whole shall become But nothing in this section shall alter or repeal any statute requiring
due; or in certain cases the nature of the consideration to be stated in the
instrument.
(d) with exchange, whether at a fixed rate or at the current rate; or
Sec. 7. When payable on demand. - An instrument is payable on
(e) with costs of collection or an attorney's fee, in case payment shall demand:
not be made at maturity.
(a) When it is so expressed to be payable on demand, or at sight, or
Sec. 3. When promise is unconditional. - An unqualified order or on presentation; or
promise to pay is unconditional within the meaning of this Act
though coupled with: (b) In which no time for payment is expressed.

(a) An indication of a particular fund out of which reimbursement is Where an instrument is issued, accepted, or indorsed when overdue,
to be made or a particular account to be debited with the amount; or it is, as regards the person so issuing, accepting, or indorsing it,
payable on demand.
(b) A statement of the transaction which gives rise to the instrument.
Sec. 8. When payable to order. - The instrument is payable to order
But an order or promise to pay out of a particular fund is not where it is drawn payable to the order of a specified person or to him
unconditional. or his order. It may be drawn payable to the order of:

Sec. 4. Determinable future time; what constitutes. - An instrument (a) A payee who is not maker, drawer, or drawee; or
is payable at a determinable future time, within the meaning of this
Act, which is expressed to be payable: (b) The drawer or maker; or

(a) At a fixed period after date or sight; or (c) The drawee; or

(b) On or before a fixed or determinable future time specified (d) Two or more payees jointly; or
therein; or
(e) One or some of several payees; or
(c) On or at a fixed period after the occurrence of a specified event
(f) The holder of an office for the time being.
which is certain to happen, though the time of happening be
uncertain. Where the instrument is payable to order, the payee must be named
or otherwise indicated therein with reasonable certainty.
An instrument payable upon a contingency is not negotiable, and the
happening of the event does not cure the defect. Sec. 9. When payable to bearer. - The instrument is payable to
bearer
Sec. 5. Additional provisions not affecting negotiability. - An
instrument which contains an order or promise to do any act in (a) When it is expressed to be so payable; or
addition to the payment of money is not negotiable. But the
negotiable character of an instrument otherwise negotiable is not (b) When it is payable to a person named therein or bearer; or
affected by a provision which:
(c) When it is payable to the order of a fictitious or non-existing Sec. 17. Construction where instrument is ambiguous. - Where the
person, and such fact was known to the person making it so payable; language of the instrument is ambiguous or there are omissions
or therein, the following rules of construction apply:

(d) When the name of the payee does not purport to be the name of (a) Where the sum payable is expressed in words and also in figures
any person; or and there is a discrepancy between the two, the sum denoted by the
words is the sum payable; but if the words are ambiguous or
(e) When the only or last indorsement is an indorsement in blank. uncertain, reference may be had to the figures to fix the amount;
Sec. 10. Terms, when sufficient. - The instrument need not follow
(b) Where the instrument provides for the payment of interest,
the language of this Act, but any terms are sufficient which clearly
without specifying the date from which interest is to run, the interest
indicate an intention to conform to the requirements hereof.
runs from the date of the instrument, and if the instrument is undated,
from the issue thereof;
Sec. 11. Date, presumption as to. - Where the instrument or an
acceptance or any indorsement thereon is dated, such date is deemed (c) Where the instrument is not dated, it will be considered to be
prima facie to be the true date of the making, drawing, acceptance, dated as of the time it was issued;
or indorsement, as the case may be.
(d) Where there is a conflict between the written and printed
Sec. 12. Ante-dated and post-dated. - The instrument is not invalid provisions of the instrument, the written provisions prevail;
for the reason only that it is ante-dated or post-dated, provided this
is not done for an illegal or fraudulent purpose. The person to whom (e) Where the instrument is so ambiguous that there is doubt whether
an instrument so dated is delivered acquires the title thereto as of the it is a bill or note, the holder may treat it as either at his election;
date of delivery.
(f) Where a signature is so placed upon the instrument that it is not
Sec. 13. When date may be inserted. - Where an instrument clear in what capacity the person making the same intended to sign,
expressed to be payable at a fixed period after date is issued undated, he is to be deemed an indorser;
or where the acceptance of an instrument payable at a fixed period
after sight is undated, any holder may insert therein the true date of (g) Where an instrument containing the word "I promise to pay" is
issue or acceptance, and the instrument shall be payable accordingly. signed by two or more persons, they are deemed to be jointly and
The insertion of a wrong date does not avoid the instrument in the severally liable thereon.
hands of a subsequent holder in due course; but as to him, the date
so inserted is to be regarded as the true date. Sec. 18. Liability of person signing in trade or assumed name. - No
person is liable on the instrument whose signature does not appear
Sec. 14. Blanks; when may be filled. - Where the instrument is thereon, except as herein otherwise expressly provided. But one who
wanting in any material particular, the person in possession thereof signs in a trade or assumed name will be liable to the same extent as
has a prima facie authority to complete it by filling up the blanks if he had signed in his own name.
therein. And a signature on a blank paper delivered by the person
making the signature in order that the paper may be converted into Sec. 19. Signature by agent; authority; how shown. - The signature
a negotiable instrument operates as a prima facie authority to fill it of any party may be made by a duly authorized agent. No particular
up as such for any amount. In order, however, that any such form of appointment is necessary for this purpose; and the authority
instrument when completed may be enforced against any person of the agent may be established as in other cases of agency.
who became a party thereto prior to its completion, it must be filled
up strictly in accordance with the authority given and within a Sec. 20. Liability of person signing as agent, and so forth. - Where
reasonable time. But if any such instrument, after completion, is the instrument contains or a person adds to his signature words
negotiated to a holder in due course, it is valid and effectual for all indicating that he signs for or on behalf of a principal or in a
purposes in his hands, and he may enforce it as if it had been filled representative capacity, he is not liable on the instrument if he was
up strictly in accordance with the authority given and within a duly authorized; but the mere addition of words describing him as
reasonable time. an agent, or as filling a representative character, without disclosing
his principal, does not exempt him from personal liability.
Sec. 15. Incomplete instrument not delivered. - Where an
incomplete instrument has not been delivered, it will not, if Sec. 21. Signature by procuration; effect of. - A signature
completed and negotiated without authority, be a valid contract in by "procuration" operates as notice that the agent has but a limited
the hands of any holder, as against any person whose signature was authority to sign, and the principal is bound only in case the agent in
placed thereon before delivery. so signing acted within the actual limits of his authority.

Sec. 16. Delivery; when effectual; when presumed. - Every contract Sec. 22. Effect of indorsement by infant or corporation.- The
on a negotiable instrument is incomplete and revocable until indorsement or assignment of the instrument by a corporation or by
delivery of the instrument for the purpose of giving effect thereto. an infant passes the property therein, notwithstanding that from want
As between immediate parties and as regards a remote party other of capacity, the corporation or infant may incur no liability thereon.
than a holder in due course, the delivery, in order to be effectual,
must be made either by or under the authority of the party making, Sec. 23. Forged signature; effect of. - When a signature is forged or
drawing, accepting, or indorsing, as the case may be; and, in such made without the authority of the person whose signature it purports
case, the delivery may be shown to have been conditional, or for a to be, it is wholly inoperative, and no right to retain the instrument,
special purpose only, and not for the purpose of transferring the or to give a discharge therefor, or to enforce payment thereof against
property in the instrument. But where the instrument is in the hands any party thereto, can be acquired through or under such signature,
of a holder in due course, a valid delivery thereof by all parties prior unless the party against whom it is sought to enforce such right is
to him so as to make them liable to him is conclusively presumed. precluded from setting up the forgery or want of authority.
And where the instrument is no longer in the possession of a party
whose signature appears thereon, a valid and intentional delivery by II. CONSIDERATION
him is presumed until the contrary is proved.
Sec. 24. Presumption of consideration. - Every negotiable Sec. 36. When indorsement restrictive. - An indorsement is
instrument is deemed prima facie to have been issued for a valuable restrictive which either:
consideration; and every person whose signature appears thereon to
have become a party thereto for value. (a) Prohibits the further negotiation of the instrument; or

Sec. 25. Value, what constitutes. — Value is any consideration (b) Constitutes the indorsee the agent of the indorser; or
sufficient to support a simple contract. An antecedent or pre-existing
(c) Vests the title in the indorsee in trust for or to the use of some
debt constitutes value; and is deemed such whether the instrument is
other persons.
payable on demand or at a future time.
But the mere absence of words implying power to negotiate does not
Sec. 26. What constitutes holder for value. - Where value has at any
make an indorsement restrictive.
time been given for the instrument, the holder is deemed a holder for
value in respect to all parties who become such prior to that time. Sec. 37. Effect of restrictive indorsement; rights of indorsee. - A
Sec. 27. When lien on instrument constitutes holder for value. — restrictive indorsement confers upon the indorsee the right:
Where the holder has a lien on the instrument arising either from
contract or by implication of law, he is deemed a holder for value to (a) to receive payment of the instrument;
the extent of his lien.
(b) to bring any action thereon that the indorser could bring;
Sec. 28. Effect of want of consideration. - Absence or failure of
(c) to transfer his rights as such indorsee, where the form of the
consideration is a matter of defense as against any person not a
indorsement authorizes him to do so.
holder in due course; and partial failure of consideration is a defense
pro tanto, whether the failure is an ascertained and liquidated amount But all subsequent indorsees acquire only the title of the first
or otherwise. indorsee under the restrictive indorsement.
Sec. 29. Liability of accommodation party. - An accommodation Sec. 38. Qualified indorsement. - A qualified indorsement
party is one who has signed the instrument as maker, drawer, constitutes the indorser a mere assignor of the title to the instrument.
acceptor, or indorser, without receiving value therefor, and for the It may be made by adding to the indorser's signature the words
purpose of lending his name to some other person. Such a person is "without recourse" or any words of similar import. Such an
liable on the instrument to a holder for value, notwithstanding such indorsement does not impair the negotiable character of the
holder, at the time of taking the instrument, knew him to be only an instrument.
accommodation party.
Sec. 39. Conditional indorsement. - Where an indorsement is
III. NEGOTIATION
conditional, the party required to pay the instrument may disregard
the condition and make payment to the indorsee or his transferee
Sec. 30. What constitutes negotiation. - An instrument is negotiated whether the condition has been fulfilled or not. But any person to
when it is transferred from one person to another in such manner as whom an instrument so indorsed is negotiated will hold the same, or
to constitute the transferee the holder thereof. If payable to bearer, it the proceeds thereof, subject to the rights of the person indorsing
is negotiated by delivery; if payable to order, it is negotiated by the conditionally.
indorsement of the holder and completed by delivery.
Sec. 40. Indorsement of instrument payable to bearer. - Where an
Sec. 31. Indorsement; how made. - The indorsement must be written instrument, payable to bearer, is indorsed specially, it may
on the instrument itself or upon a paper attached thereto. The nevertheless be further negotiated by delivery; but the person
signature of the indorser, without additional words, is a sufficient indorsing specially is liable as indorser to only such holders as make
indorsement. title through his indorsement.

Sec. 32. Indorsement must be of entire instrument. - The Sec. 41. Indorsement where payable to two or more persons. -
indorsement must be an indorsement of the entire instrument. An Where an instrument is payable to the order of two or more payees
indorsement which purports to transfer to the indorsee a part only of or indorsees who are not partners, all must indorse unless the one
the amount payable, or which purports to transfer the instrument to indorsing has authority to indorse for the others.
two or more indorsees severally, does not operate as a negotiation of
Sec. 42. Effect of instrument drawn or indorsed to a person as
the instrument. But where the instrument has been paid in part, it
cashier. - Where an instrument is drawn or indorsed to a person
may be indorsed as to the residue.
as "cashier" or other fiscal officer of a bank or corporation, it is
Sec. 33. Kinds of indorsement. - An indorsement may be either deemed prima facie to be payable to the bank or corporation of
special or in blank; and it may also be either restrictive or qualified which he is such officer, and may be negotiated by either the
or conditional. indorsement of the bank or corporation or the indorsement of the
officer.
Sec. 34. Special indorsement; indorsement in blank. - A special
indorsement specifies the person to whom, or to whose order, the Sec. 43. Indorsement where name is misspelled, and so forth. -
instrument is to be payable, and the indorsement of such indorsee is Where the name of a payee or indorsee is wrongly designated or
necessary to the further negotiation of the instrument. An misspelled, he may indorse the instrument as therein described
indorsement in blank specifies no indorsee, and an instrument so adding, if he thinks fit, his proper signature.
indorsed is payable to bearer, and may be negotiated by delivery.
Sec. 44. Indorsement in representative capacity. - Where any person
Sec. 35. Blank indorsement; how changed to special indorsement. - is under obligation to indorse in a representative capacity, he may
The holder may convert a blank indorsement into a special indorse in such terms as to negative personal liability.
indorsement by writing over the signature of the indorser in blank
Sec. 45. Time of indorsement; presumption. - Except where an
any contract consistent with the character of the indorsement.
indorsement bears date after the maturity of the instrument, every
negotiation is deemed prima facie to have been effected before the Sec. 56. What constitutes notice of defect. - To constitutes notice of
instrument was overdue. an infirmity in the instrument or defect in the title of the person
negotiating the same, the person to whom it is negotiated must have
Sec. 46. Place of indorsement; presumption. - Except where the had actual knowledge of the infirmity or defect, or knowledge of
contrary appears, every indorsement is presumed prima facie to have such facts that his action in taking the instrument amounted to bad
been made at the place where the instrument is dated. faith.
Sec. 47. Continuation of negotiable character. - An instrument
Sec. 57. Rights of holder in due course. - A holder in due course
negotiable in its origin continues to be negotiable until it has been
holds the instrument free from any defect of title of prior parties, and
restrictively indorsed or discharged by payment or otherwise.
free from defenses available to prior parties among themselves, and
may enforce payment of the instrument for the full amount thereof
Sec. 48. Striking out indorsement. - The holder may at any time
against all parties liable thereon.
strike out any indorsement which is not necessary to his title. The
indorser whose indorsement is struck out, and all indorsers Sec. 58. When subject to original defense. - In the hands of any
subsequent to him, are thereby relieved from liability on the holder other than a holder in due course, a negotiable instrument is
instrument. subject to the same defenses as if it were non-negotiable. But a
holder who derives his title through a holder in due course, and who
Sec. 49. Transfer without indorsement; effect of. - Where the holder is not himself a party to any fraud or illegality affecting the
of an instrument payable to his order transfers it for value without instrument, has all the rights of such former holder in respect of all
indorsing it, the transfer vests in the transferee such title as the parties prior to the latter.
transferor had therein, and the transferee acquires in addition, the
right to have the indorsement of the transferor. But for the purpose Sec. 59. Who is deemed holder in due course. - Every holder is
of determining whether the transferee is a holder in due course, the deemed prima facie to be a holder in due course; but when it is
negotiation takes effect as of the time when the indorsement is shown that the title of any person who has negotiated the instrument
actually made. was defective, the burden is on the holder to prove that he or some
person under whom he claims acquired the title as holder in due
Sec. 50. When prior party may negotiate instrument. - Where an course. But the last-mentioned rule does not apply in favor of a party
instrument is negotiated back to a prior party, such party may, who became bound on the instrument prior to the acquisition of such
subject to the provisions of this Act, reissue and further negotiable defective title.
the same. But he is not entitled to enforce payment thereof against
any intervening party to whom he was personally liable. V. LIABILITIES OF PARTIES

IV. RIGHTS OF THE HOLDER Sec. 60. Liability of maker. - The maker of a negotiable instrument,
by making it, engages that he will pay it according to its tenor, and
Sec. 51. Right of holder to sue; payment. - The holder of a admits the existence of the payee and his then capacity to indorse.
negotiable instrument may to sue thereon in his own name; and
payment to him in due course discharges the instrument. Sec. 61. Liability of drawer. - The drawer by drawing the instrument
admits the existence of the payee and his then capacity to indorse;
Sec. 52. What constitutes a holder in due course. - A holder in due
and engages that, on due presentment, the instrument will be
course is a holder who has taken the instrument under the following
accepted or paid, or both, according to its tenor, and that if it be
conditions:
dishonored and the necessary proceedings on dishonor be duly
(a) That it is complete and regular upon its face; taken, he will pay the amount thereof to the holder or to any
subsequent indorser who may be compelled to pay it. But the drawer
(b) That he became the holder of it before it was overdue, and may insert in the instrument an express stipulation negativing or
without notice that it has been previously dishonored, if such was limiting his own liability to the holder.
the fact;
Sec. 62. Liability of acceptor. - The acceptor, by accepting the
(c) That he took it in good faith and for value; instrument, engages that he will pay it according to the tenor of his
acceptance and admits:
(d) That at the time it was negotiated to him, he had no notice of any
infirmity in the instrument or defect in the title of the person (a) The existence of the drawer, the genuineness of his signature,
negotiating it. and his capacity and authority to draw the instrument; and
Sec. 53. When person not deemed holder in due course. - Where an
(b) The existence of the payee and his then capacity to indorse.
instrument payable on demand is negotiated on an unreasonable
length of time after its issue, the holder is not deemed a holder in Sec. 63. When a person deemed indorser. - A person placing his
due course. signature upon an instrument otherwise than as maker, drawer, or
acceptor, is deemed to be indorser unless he clearly indicates by
Sec. 54. Notice before full amount is paid. - Where the transferee
appropriate words his intention to be bound in some other capacity.
receives notice of any infirmity in the instrument or defect in the title
of the person negotiating the same before he has paid the full amount
Sec. 64. Liability of irregular indorser. - Where a person, not
agreed to be paid therefor, he will be deemed a holder in due course
otherwise a party to an instrument, places thereon his signature in
only to the extent of the amount therefore paid by him.
blank before delivery, he is liable as indorser, in accordance with the
following rules:
Sec. 55. When title defective. - The title of a person who negotiates
an instrument is defective within the meaning of this Act when he (a) If the instrument is payable to the order of a third person, he is
obtained the instrument, or any signature thereto, by fraud, duress, liable to the payee and to all subsequent parties.
or force and fear, or other unlawful means, or for an illegal
consideration, or when he negotiates it in breach of faith, or under (b) If the instrument is payable to the order of the maker or drawer,
such circumstances as amount to a fraud. or is payable to bearer, he is liable to all parties subsequent to the
maker or drawer.
(c) If he signs for the accommodation of the payee, he is liable to all bill of exchange, presentment for payment will be sufficient if made
parties subsequent to the payee. within a reasonable time after the last negotiation thereof.

Sec. 65. Warranty where negotiation by delivery and so forth. — Sec. 72. What constitutes a sufficient presentment. - Presentment for
Every person negotiating an instrument by delivery or by a qualified payment, to be sufficient, must be made:
indorsement warrants:
(a) By the holder, or by some person authorized to receive payment
(a) That the instrument is genuine and in all respects what it purports on his behalf;
to be;
(b) At a reasonable hour on a business day;
(b) That he has a good title to it;
(c) At a proper place as herein defined;
(c) That all prior parties had capacity to contract;
(d) To the person primarily liable on the instrument, or if he is absent
(d) That he has no knowledge of any fact which would impair the or inaccessible, to any person found at the place where the
validity of the instrument or render it valueless. presentment is made.

But when the negotiation is by delivery only, the warranty extends Sec. 73. Place of presentment. - Presentment for payment is made at
in favor of no holder other than the immediate transferee. the proper place:

The provisions of subdivision (c) of this section do not apply to a (a) Where a place of payment is specified in the instrument and it is
person negotiating public or corporation securities other than bills there presented;
and notes.
(b) Where no place of payment is specified but the address of the
Sec. 66. Liability of general indorser. - Every indorser who indorses person to make payment is given in the instrument and it is there
without qualification, warrants to all subsequent holders in due presented;
course:
(c) Where no place of payment is specified and no address is given
(a) The matters and things mentioned in subdivisions (a), (b), and and the instrument is presented at the usual place of business or
(c) of the next preceding section; and residence of the person to make payment;
(b) That the instrument is, at the time of his indorsement, valid and (d) In any other case if presented to the person to make payment
subsisting; wherever he can be found, or if presented at his last known place of
business or residence.
And, in addition, he engages that, on due presentment, it shall be
accepted or paid, or both, as the case may be, according to its tenor, Sec. 74. Instrument must be exhibited. - The instrument must be
and that if it be dishonored and the necessary proceedings on exhibited to the person from whom payment is demanded, and when
dishonor be duly taken, he will pay the amount thereof to the holder, it is paid, must be delivered up to the party paying it.
or to any subsequent indorser who may be compelled to pay it.
Sec. 75. Presentment where instrument payable at bank. - Where the
Sec. 67. Liability of indorser where paper negotiable by delivery. — instrument is payable at a bank, presentment for payment must be
Where a person places his indorsement on an instrument negotiable made during banking hours, unless the person to make payment has
by delivery, he incurs all the liability of an indorser. no funds there to meet it at any time during the day, in which case
presentment at any hour before the bank is closed on that day is
Sec. 68. Order in which indorsers are liable. - As respect one sufficient.
another, indorsers are liable prima facie in the order in which they
indorse; but evidence is admissible to show that, as between or Sec. 76. Presentment where principal debtor is dead. - Where the
among themselves, they have agreed otherwise. Joint payees or person primarily liable on the instrument is dead and no place of
joint indorsees who indorse are deemed to indorse jointly and payment is specified, presentment for payment must be made to his
severally. personal representative, if such there be, and if, with the exercise of
reasonable diligence, he can be found.
Sec. 69. Liability of an agent or broker. - Where a broker or other
agent negotiates an instrument without indorsement, he incurs all the Sec. 77. Presentment to persons liable as partners. - Where the
liabilities prescribed by Section Sixty-five of this Act, unless he persons primarily liable on the instrument are liable as partners and
discloses the name of his principal and the fact that he is acting only no place of payment is specified, presentment for payment may be
as agent. made to any one of them, even though there has been a dissolution
of the firm.
VI. PRESENTATION FOR PAYMENT
Sec. 78. Presentment to joint debtors. - Where there are several
Sec. 70. Effect of want of demand on principal debtor. - Presentment
persons, not partners, primarily liable on the instrument and no place
for payment is not necessary in order to charge the person primarily
of payment is specified, presentment must be made to them all.
liable on the instrument; but if the instrument is, by its terms,
payable at a special place, and he is able and willing to pay it there
Sec. 79. When presentment not required to charge the drawer. -
at maturity, such ability and willingness are equivalent to a tender of
Presentment for payment is not required in order to charge the
payment upon his part. But except as herein otherwise provided,
drawer where he has no right to expect or require that the drawee or
presentment for payment is necessary in order to charge the drawer
acceptor will pay the instrument.
and indorsers.
Sec. 80. When presentment not required to charge the indorser. -
Sec. 71. Presentment where instrument is not payable on demand
Presentment is not required in order to charge an indorser where the
and where payable on demand. - Where the instrument is not
instrument was made or accepted for his accommodation and he has
payable on demand, presentment must be made on the day it falls
no reason to expect that the instrument will be paid if presented.
due. Where it is payable on demand, presentment must be made
within a reasonable time after its issue, except that in the case of a
Sec. 81. When delay in making presentment is excused. - Delay in Sec. 91. Notice given by agent. - Notice of dishonor may be given
making presentment for payment is excused when the delay is by any agent either in his own name or in the name of any party
caused by circumstances beyond the control of the holder and not entitled to given notice, whether that party be his principal or not.
imputable to his default, misconduct, or negligence. When the cause
of delay ceases to operate, presentment must be made with Sec. 92. Effect of notice on behalf of holder. - Where notice is given
reasonable diligence. by or on behalf of the holder, it inures to the benefit of all subsequent
holders and all prior parties who have a right of recourse against the
Sec. 82. When presentment for payment is excused. - Presentment party to whom it is given.
for payment is excused:
Sec. 93. Effect where notice is given by party entitled thereto. -
(a) Where, after the exercise of reasonable diligence, presentment, Where notice is given by or on behalf of a party entitled to give
as required by this Act, cannot be made; notice, it inures to the benefit of the holder and all parties subsequent
to the party to whom notice is given.
(b) Where the drawee is a fictitious person;
Sec. 94. When agent may give notice. - Where the instrument has
(c) By waiver of presentment, express or implied.
been dishonored in the hands of an agent, he may either himself give
Sec. 83. When instrument dishonored by non-payment. - The notice to the parties liable thereon, or he may give notice to his
instrument is dishonored by non-payment when: principal. If he gives notice to his principal, he must do so within the
same time as if he were the holder, and the principal, upon the receipt
(a) It is duly presented for payment and payment is refused or cannot of such notice, has himself the same time for giving notice as if the
be obtained; or agent had been an independent holder.
(b) Presentment is excused and the instrument is overdue and Sec. 95. When notice sufficient. - A written notice need not be
unpaid. signed and an insufficient written notice may be supplemented and
validated by verbal communication. A misdescription of the
Sec. 84. Liability of person secondarily liable, when instrument
instrument does not vitiate the notice unless the party to whom the
dishonored. - Subject to the provisions of this Act, when the
notice is given is in fact misled thereby.
instrument is dishonored by non-payment, an immediate right of
recourse to all parties secondarily liable thereon accrues to the Sec. 96. Form of notice. - The notice may be in writing or merely
holder. oral and may be given in any terms which sufficiently identify the
instrument, and indicate that it has been dishonored by non-
Sec. 85. Time of maturity. - Every negotiable instrument is payable
acceptance or non-payment. It may in all cases be given by
at the time fixed therein without grace. When the day of maturity
delivering it personally or through the mails.
falls upon Sunday or a holiday, the instruments falling due or
becoming payable on Saturday are to be presented for payment on Sec. 97. To whom notice may be given. - Notice of dishonor may be
the next succeeding business day except that instruments payable on given either to the party himself or to his agent in that behalf.
demand may, at the option of the holder, be presented for payment
before twelve o'clock noon on Saturday when that entire day is not Sec. 98. Notice where party is dead. - When any party is dead and
a holiday. his death is known to the party giving notice, the notice must be
given to a personal representative, if there be one, and if with
Sec. 86. Time; how computed. - When the instrument is payable at
reasonable diligence, he can be found. If there be no personal
a fixed period after date, after sight, or after that happening of a
representative, notice may be sent to the last residence or last place
specified event, the time of payment is determined by excluding the
of business of the deceased.
day from which the time is to begin to run, and by including the date
of payment. Sec. 99. Notice to partners. - Where the parties to be notified are
partners, notice to any one partner is notice to the firm, even though
Sec. 87. Rule where instrument payable at bank. - Where the
there has been a dissolution.
instrument is made payable at a bank, it is equivalent to an order to
the bank to pay the same for the account of the principal debtor Sec. 100. Notice to persons jointly liable. - Notice to joint persons
thereon. who are not partners must be given to each of them unless one of
them has authority to receive such notice for the others.
Sec. 88. What constitutes payment in due course. - Payment is made
in due course when it is made at or after the maturity of the payment Sec. 101. Notice to bankrupt. - Where a party has been adjudged a
to the holder thereof in good faith and without notice that his title is bankrupt or an insolvent, or has made an assignment for the benefit
defective. of creditors, notice may be given either to the party himself or to his
trustee or assignee.

VII. NOTICE OF DISHONOR Sec. 102. Time within which notice must be given. - Notice may be
given as soon as the instrument is dishonored and, unless delay is
Sec. 89. To whom notice of dishonor must be given. - Except as excused as hereinafter provided, must be given within the time fixed
herein otherwise provided, when a negotiable instrument has been by this Act.
dishonored by non-acceptance or non-payment, notice of dishonor
must be given to the drawer and to each indorser, and any drawer or Sec. 103. Where parties reside in same place. - Where the person
indorser to whom such notice is not given is discharged. giving and the person to receive notice reside in the same place,
notice must be given within the following times:
Sec. 90. By whom given. - The notice may be given by or on behalf
(a) If given at the place of business of the person to receive notice,
of the holder, or by or on behalf of any party to the instrument who
it must be given before the close of business hours on the day
might be compelled to pay it to the holder, and who, upon taking it
following.
up, would have a right to reimbursement from the party to whom the
notice is given.
(b) If given at his residence, it must be given before the usual hours
of rest on the day following.
(c) If sent by mail, it must be deposited in the post office in time to ceases to operate, notice must be given with reasonable diligence.
reach him in usual course on the day following. Sec. 114. When notice need not be given to drawer. - Notice of
dishonor is not required to be given to the drawer in either of the
Sec. 104. Where parties reside in different places. - Where the following cases:
person giving and the person to receive notice reside in different
places, the notice must be given within the following times: (a) Where the drawer and drawee are the same person;

(a) If sent by mail, it must be deposited in the post office in time to (b) When the drawee is fictitious person or a person not having
go by mail the day following the day of dishonor, or if there be no capacity to contract;
mail at a convenient hour on last day, by the next mail thereafter.
(c) When the drawer is the person to whom the instrument is
(b) If given otherwise than through the post office, then within the presented for payment;
time that notice would have been received in due course of mail, if
(d) Where the drawer has no right to expect or require that the
it had been deposited in the post office within the time specified in
drawee or acceptor will honor the instrument;
the last subdivision.
(e) Where the drawer has countermanded payment.
Sec. 105. When sender deemed to have given due notice. - Where
notice of dishonor is duly addressed and deposited in the post office, Sec. 115. When notice need not be given to indorser. — Notice of
the sender is deemed to have given due notice, notwithstanding any dishonor is not required to be given to an indorser in either of the
miscarriage in the mails. following cases:
Sec. 106. Deposit in post office; what constitutes. - Notice is deemed (a) When the drawee is a fictitious person or person not having
to have been deposited in the post-office when deposited in any capacity to contract, and the indorser was aware of that fact at the
branch post office or in any letter box under the control of the post- time he indorsed the instrument;
office department.
(b) Where the indorser is the person to whom the instrument is
Sec. 107. Notice to subsequent party; time of. - Where a party presented for payment;
receives notice of dishonor, he has, after the receipt of such notice,
the same time for giving notice to antecedent parties that the holder (c) Where the instrument was made or accepted for his
has after the dishonor. accommodation.

Sec. 108. Where notice must be sent. - Where a party has added an Sec. 116. Notice of non-payment where acceptance refused. - Where
address to his signature, notice of dishonor must be sent to that due notice of dishonor by non-acceptance has been given, notice of
address; but if he has not given such address, then the notice must a subsequent dishonor by non-payment is not necessary unless in the
be sent as follows: meantime the instrument has been accepted.

(a) Either to the post-office nearest to his place of residence or to the Sec. 117. Effect of omission to give notice of non-acceptance. - An
post-office where he is accustomed to receive his letters; or omission to give notice of dishonor by non-acceptance does not
prejudice the rights of a holder in due course subsequent to the
(b) If he lives in one place and has his place of business in another, omission.
notice may be sent to either place; or
Sec. 118. When protest need not be made; when must be made. -
(c) If he is sojourning in another place, notice may be sent to the Where any negotiable instrument has been dishonored, it may be
place where he is so sojourning. protested for non-acceptance or non-payment, as the case may be;
but protest is not required except in the case of foreign bills of
But where the notice is actually received by the party within the time
exchange.robles virtual law library
specified in this Act, it will be sufficient, though not sent in
accordance with the requirement of this section. VIII. DISCHARGE OF NEGOTIABLE INSTRUMENTS
Sec. 109. Waiver of notice. - Notice of dishonor may be waived Sec. 119. Instrument; how discharged. - A negotiable instrument is
either before the time of giving notice has arrived or after the discharged:
omission to give due notice, and the waiver may be expressed or
implied. (a) By payment in due course by or on behalf of the principal debtor;

Sec. 110. Whom affected by waiver. - Where the waiver is embodied (b) By payment in due course by the party accommodated, where
in the instrument itself, it is binding upon all parties; but, where it is the instrument is made or accepted for his accommodation;
written above the signature of an indorser, it binds him only.
(c) By the intentional cancellation thereof by the holder;
Sec. 111. Waiver of protest. - A waiver of protest, whether in the
case of a foreign bill of exchange or other negotiable instrument, is (d) By any other act which will discharge a simple contract for the
deemed to be a waiver not only of a formal protest but also of payment of money;
presentment and notice of dishonor.
(e) When the principal debtor becomes the holder of the instrument
Sec. 112. When notice is dispensed with. - Notice of dishonor is at or after maturity in his own right.
dispensed with when, after the exercise of reasonable diligence, it
Sec. 120. When persons secondarily liable on the instrument are
cannot be given to or does not reach the parties sought to be
discharged. - A person secondarily liable on the instrument is
charged.
discharged:
Sec. 113. Delay in giving notice; how excused. - Delay in giving (a) By any act which discharges the instrument;
notice of dishonor is excused when the delay is caused by
circumstances beyond the control of the holder and not imputable to (b) By the intentional cancellation of his signature by the holder;
his default, misconduct, or negligence. When the cause of delay
(c) By the discharge of a prior party; signed by the person giving it, requiring the person to whom it is
addressed to pay on demand or at a fixed or determinable future time
(d) By a valid tender or payment made by a prior party; a sum certain in money to order or to bearer.
(e) By a release of the principal debtor unless the holder's right of Sec. 127. Bill not an assignment of funds in hands of drawee. - A
recourse against the party secondarily liable is expressly reserved; bill of itself does not operate as an assignment of the funds in the
hands of the drawee available for the payment thereof, and the
(f) By any agreement binding upon the holder to extend the time of drawee is not liable on the bill unless and until he accepts the same.
payment or to postpone the holder's right to enforce the instrument
unless made with the assent of the party secondarily liable or unless Sec. 128. Bill addressed to more than one drawee. - A bill may be
the right of recourse against such party is expressly reserved. addressed to two or more drawees jointly, whether they are partners
or not; but not to two or more drawees in the alternative or in
Sec. 121. Right of party who discharges instrument. - Where the
succession.
instrument is paid by a party secondarily liable thereon, it is not
discharged; but the party so paying it is remitted to his former rights
Sec. 129. Inland and foreign bills of exchange. - An inland bill of
as regard all prior parties, and he may strike out his own and all
exchange is a bill which is, or on its face purports to be, both drawn
subsequent indorsements and against negotiate the instrument,
and payable within the Philippines. Any other bill is a foreign bill.
except:
Unless the contrary appears on the face of the bill, the holder may
(a) Where it is payable to the order of a third person and has been treat it as an inland bill.
paid by the drawer; and
Sec. 130. When bill may be treated as promissory note. - Where in
(b) Where it was made or accepted for accommodation and has been a bill the drawer and drawee are the same person or where the
paid by the party accommodated. drawee is a fictitious person or a person not having capacity to
contract, the holder may treat the instrument at his option either as a
Sec. 122. Renunciation by holder. - The holder may expressly bill of exchange or as a promissory note.
renounce his rights against any party to the instrument before, at, or
after its maturity. An absolute and unconditional renunciation of his Sec. 131. Referee in case of need. - The drawer of a bill and any
rights against the principal debtor made at or after the maturity of indorser may insert thereon the name of a person to whom the holder
the instrument discharges the instrument. But a renunciation does may resort in case of need; that is to say, in case the bill is dishonored
not affect the rights of a holder in due course without notice. A by non-acceptance or non-payment. Such person is called a referee
renunciation must be in writing unless the instrument is delivered up in case of need. It is in the option of the holder to resort to the referee
to the person primarily liable thereon. in case of need or not as he may see fit.

Sec. 123. Cancellation; unintentional; burden of proof. - A X. ACCEPTANCE

cancellation made unintentionally or under a mistake or without the
Sec. 132. Acceptance; how made, by and so forth. - The acceptance
authority of the holder, is inoperative but where an instrument or any
of a bill is the signification by the drawee of his assent to the order
signature thereon appears to have been cancelled, the burden of
of the drawer. The acceptance must be in writing and signed by the
proof lies on the party who alleges that the cancellation was made
drawee. It must not express that the drawee will perform his promise
unintentionally or under a mistake or without authority.
by any other means than the payment of money.
Sec. 124. Alteration of instrument; effect of. - Where a negotiable Sec. 133. Holder entitled to acceptance on face of bill. - The holder
instrument is materially altered without the assent of all parties liable of a bill presenting the same for acceptance may require that the
thereon, it is avoided, except as against a party who has himself acceptance be written on the bill, and, if such request is refused, may
made, authorized, or assented to the alteration and subsequent treat the bill as dishonored.
indorsers.
But when an instrument has been materially altered and is in the Sec. 134. Acceptance by separate instrument. - Where an acceptance
hands of a holder in due course not a party to the alteration, he may is written on a paper other than the bill itself, it does not bind the
enforce payment thereof according to its original tenor. acceptor except in favor of a person to whom it is shown and who,
on the faith thereof, receives the bill for value.
Sec. 125. What constitutes a material alteration. - Any alteration
which changes: Sec. 135. Promise to accept; when equivalent to acceptance. - An
unconditional promise in writing to accept a bill before it is drawn
(a) The date; is deemed an actual acceptance in favor of every person who, upon
the faith thereof, receives the bill for value.
(b) The sum payable, either for principal or interest;
Sec. 136. Time allowed drawee to accept. - The drawee is allowed
(c) The time or place of payment: twenty-four hours after presentment in which to decide whether or
not he will accept the bill; the acceptance, if given, dates as of the
(d) The number or the relations of the parties;
day of presentation.
(e) The medium or currency in which payment is to be made;
Sec. 137. Liability of drawee returning or destroying bill. - Where a
(f) Or which adds a place of payment where no place of payment is drawee to whom a bill is delivered for acceptance destroys the same,
specified, or any other change or addition which alters the effect of or refuses within twenty-four hours after such delivery or within
the instrument in any respect, is a material alteration. such other period as the holder may allow, to return the bill accepted
or non-accepted to the holder, he will be deemed to have accepted
BILLS OF EXCHANGE the same.
IX. FORM AND INTERPRETATION Sec. 138. Acceptance of incomplete bill. - A bill may be accepted
before it has been signed by the drawer, or while otherwise
Sec. 126. Bill of exchange, defined. - A bill of exchange is an
incomplete, or when it is overdue, or after it has been dishonored by
unconditional order in writing addressed by one person to another,
a previous refusal to accept, or by non payment. But when a bill
payable after sight is dishonored by non-acceptance and the drawee (a) Where a bill is addressed to two or more drawees who are not
subsequently accepts it, the holder, in the absence of any different partners, presentment must be made to them all unless one has
agreement, is entitled to have the bill accepted as of the date of the authority to accept or refuse acceptance for all, in which case
first presentment. presentment may be made to him only;

Sec. 139. Kinds of acceptance. - An acceptance is either general or (b) Where the drawee is dead, presentment may be made to his
qualified. A general acceptance assents without qualification to the personal representative;
order of the drawer. A qualified acceptance in express terms varies
the effect of the bill as drawn. (c) Where the drawee has been adjudged a bankrupt or an insolvent
or has made an assignment for the benefit of creditors, presentment
Sec. 140. What constitutes a general acceptance. - An acceptance to may be made to him or to his trustee or assignee.
pay at a particular place is a general acceptance unless it expressly
states that the bill is to be paid there only and not elsewhere. Sec. 146. On what days presentment may be made. - A bill may be
presented for acceptance on any day on which negotiable
Sec. 141. Qualified acceptance. - An acceptance is qualified which instruments may be presented for payment under the provisions of
is: Sections seventy-two and eighty-five of this Act. When Saturday is
not otherwise a holiday, presentment for acceptance may be made
(a) Conditional; that is to say, which makes payment by the acceptor before twelve o'clock noon on that day.
dependent on the fulfillment of a condition therein stated;
Sec. 147. Presentment where time is insufficient. - Where the holder
(b) Partial; that is to say, an acceptance to pay part only of the of a bill drawn payable elsewhere than at the place of business or the
amount for which the bill is drawn; residence of the drawee has no time, with the exercise of reasonable
diligence, to present the bill for acceptance before presenting it for
(c) Local; that is to say, an acceptance to pay only at a particular
payment on the day that it falls due, the delay caused by presenting
place;
the bill for acceptance before presenting it for payment is excused
(d) Qualified as to time; and does not discharge the drawers and indorsers.

(e) The acceptance of some, one or more of the drawees but not of Sec. 148. Where presentment is excused. - Presentment for
all. acceptance is excused and a bill may be treated as dishonored by
non-acceptance in either of the following cases:
Sec. 142. Rights of parties as to qualified acceptance. - The holder
may refuse to take a qualified acceptance and if he does not obtain (a) Where the drawee is dead, or has absconded, or is a fictitious
an unqualified acceptance, he may treat the bill as dishonored by person or a person not having capacity to contract by bill.
non-acceptance. Where a qualified acceptance is taken, the drawer
(b) Where, after the exercise of reasonable diligence, presentment
and indorsers are discharged from liability on the bill unless they
can not be made.
have expressly or impliedly authorized the holder to take a qualified
acceptance, or subsequently assent thereto. When the drawer or an (c) Where, although presentment has been irregular, acceptance has
indorser receives notice of a qualified acceptance, he must, within a been refused on some other ground.
reasonable time, express his dissent to the holder or he will be
deemed to have assented thereto. Sec. 149. When dishonored by nonacceptance. - A bill is dishonored
by non-acceptance:
XI. PRESENTMENT FOR ACCEPTANCE
(a) When it is duly presented for acceptance and such an acceptance
Sec. 143. When presentment for acceptance must be made. - as is prescribed by this Act is refused or can not be obtained; or
Presentment for acceptance must be made:
(b) When presentment for acceptance is excused and the bill is not
(a) Where the bill is payable after sight, or in any other case, where
accepted.
presentment for acceptance is necessary in order to fix the maturity
of the instrument; or Sec. 150. Duty of holder where bill not accepted. - Where a bill is
duly presented for acceptance and is not accepted within the
(b) Where the bill expressly stipulates that it shall be presented for
prescribed time, the person presenting it must treat the bill as
acceptance; or
dishonored by nonacceptance or he loses the right of recourse
(c) Where the bill is drawn payable elsewhere than at the residence against the drawer and indorsers.
or place of business of the drawee.
Sec. 151. Rights of holder where bill not accepted. - When a bill is
In no other case is presentment for acceptance necessary in order to dishonored by nonacceptance, an immediate right of recourse
render any party to the bill liable. against the drawer and indorsers accrues to the holder and no
presentment for payment is necessary.
Sec. 144. When failure to present releases drawer and indorser. -
Except as herein otherwise provided, the holder of a bill which is XII. PROTEST
required by the next preceding section to be presented for acceptance
Sec. 152. In what cases protest necessary. - Where a foreign bill
must either present it for acceptance or negotiate it within a
appearing on its face to be such is dishonored by nonacceptance, it
reasonable time. If he fails to do so, the drawer and all indorsers are
must be duly protested for nonacceptance, by nonacceptance is
discharged.
dishonored and where such a bill which has not previously been
dishonored by nonpayment, it must be duly protested for
Sec. 145. Presentment; how made. - Presentment for acceptance
nonpayment. If it is not so protested, the drawer and indorsers are
must be made by or on behalf of the holder at a reasonable hour, on
discharged. Where a bill does not appear on its face to be a foreign
a business day and before the bill is overdue, to the drawee or some
bill, protest thereof in case of dishonor is unnecessary.
person authorized to accept or refuse acceptance on his behalf; and
Sec. 153. Protest; how made. - The protest must be annexed to the
bill or must contain a copy thereof, and must be under the hand and Sec. 163. When deemed to be an acceptance for honor of the
seal of the notary making it and must specify: drawer. - Where an acceptance for honor does not expressly state for
whose honor it is made, it is deemed to be an acceptance for the
(a) The time and place of presentment; honor of the drawer.
(b) The fact that presentment was made and the manner thereof; Sec. 164. Liability of the acceptor for honor. - The acceptor for
honor is liable to the holder and to all parties to the bill subsequent
(c) The cause or reason for protesting the bill;
to the party for whose honor he has accepted.
(d) The demand made and the answer given, if any, or the fact that
Sec. 165. Agreement of acceptor for honor. - The acceptor for honor,
the drawee or acceptor could not be found.
by such acceptance, engages that he will, on due presentment, pay
Sec. 154. Protest, by whom made. - Protest may be made by: the bill according to the terms of his acceptance provided it shall not
have been paid by the drawee and provided also that is shall have
(a) A notary public; or been duly presented for payment and protested for non-payment and
notice of dishonor given to him.
(b) By any respectable resident of the place where the bill is
dishonored, in the presence of two or more credible witnesses. Sec. 166. Maturity of bill payable after sight; accepted for honor. -
Where a bill payable after sight is accepted for honor, its maturity is
Sec. 155. Protest; when to be made. - When a bill is protested, such
calculated from the date of the noting for non-acceptance and not
protest must be made on the day of its dishonor unless delay is
from the date of the acceptance for honor.
excused as herein provided. When a bill has been duly noted, the
protest may be subsequently extended as of the date of the noting. Sec. 167. Protest of bill accepted for honor, and so forth. - Where a
dishonored bill has been accepted for honor supra protest or contains
Sec. 156. Protest; where made. - A bill must be protested at the place a referee in case of need, it must be protested for non-payment before
where it is dishonored, except that when a bill drawn payable at the it is presented for payment to the acceptor for honor or referee in
place of business or residence of some person other than the drawee case of need.
has been dishonored by nonacceptance, it must be protested for non-
payment at the place where it is expressed to be payable, and no Sec. 168. Presentment for payment to acceptor for honor,
further presentment for payment to, or demand on, the drawee is how made. - Presentment for payment to the acceptor for honor must
necessary. be made as follows:

(a) If it is to be presented in the place where the protest for non-

Sec. 157. Protest both for non-acceptance and non-payment. - A bill
payment was made, it must be presented not later than the day
which has been protested for non-acceptance may be subsequently
following its maturity.
protested for non-payment.
(b) If it is to be presented in some other place than the place where
Sec. 158. Protest before maturity where acceptor insolvent. - Where
it was protested, then it must be forwarded within the time specified
the acceptor has been adjudged a bankrupt or an insolvent or has
in Section one hundred and four.
made an assignment for the benefit of creditors before the bill
matures, the holder may cause the bill to be protested for better Sec. 169. When delay in making presentment is excused. - The
security against the drawer and indorsers. provisions of Section eighty-one apply where there is delay in
making presentment to the acceptor for honor or referee in case of
Sec. 159. When protest dispensed with. - Protest is dispensed with
need.
by any circumstances which would dispense with notice of dishonor.
Delay in noting or protesting is excused when delay is caused by
Sec. 170. Dishonor of bill by acceptor for honor. - When the bill is
circumstances beyond the control of the holder and not imputable to
dishonored by the acceptor for honor, it must be protested for non-
his default, misconduct, or negligence. When the cause of delay
payment by him.
ceases to operate, the bill must be noted or protested with reasonable
diligence. XIV. PAYMENT FOR HONOR

Sec. 160. Protest where bill is lost and so forth. - When a bill is lost Sec. 171. Who may make payment for honor. - Where a bill has been
or destroyed or is wrongly detained from the person entitled to hold protested for non-payment, any person may intervene and pay
it, protest may be made on a copy or written particulars thereof. it supraprotest for the honor of any person liable thereon or for the
honor of the person for whose account it was drawn.

XIII. ACCEPTANCE FOR HONOR Sec. 172. Payment for honor; how made. - The payment for
honor supra protest, in order to operate as such and not as a mere
voluntary payment, must be attested by a notarial act of honor which
Sec. 161. When bill may be accepted for honor. - When a bill of
may be appended to the protest or form an extension to it.
exchange has been protested for dishonor by non-acceptance or
protested for better security and is not overdue, any person not being
Sec. 173. Declaration before payment for honor. - The notarial act
a party already liable thereon may, with the consent of the holder,
of honor must be founded on a declaration made by the payer for
intervene and accept the bill supra protest for the honor of any party
honor or by his agent in that behalf declaring his intention to pay the
liable thereon or for the honor of the person for whose account the
bill for honor and for whose honor he pays.
bill is drawn. The acceptance for honor may be for part only of the
sum for which the bill is drawn; and where there has been an Sec. 174. Preference of parties offering to pay for honor. - Where
acceptance for honor for one party, there may be a further two or more persons offer to pay a bill for the honor of different
acceptance by a different person for the honor of another party. parties, the person whose payment will discharge most parties to the
bill is to be given the preference.
Sec. 162. Acceptance for honor; how made. - An acceptance for
honor supra protest must be in writing and indicate that it is an Sec. 175. Effect on subsequent parties where bill is paid for honor. -
acceptance for honor and must be signed by the acceptor for honor. Where a bill has been paid for honor, all parties subsequent to the
party for whose honor it is paid are discharged but the payer for Sec. 187. Certification of check; effect of. - Where a check is
honor is subrogated for, and succeeds to, both the rights and duties certified by the bank on which it is drawn, the certification is
of the holder as regards the party for whose honor he pays and all equivalent to an acceptance.
parties liable to the latter.
Sec. 188. Effect where the holder of check procures it to be certified.
Sec. 176. Where holder refuses to receive payment supra protest. - -Where the holder of a check procures it to be accepted or certified,
Where the holder of a bill refuses to receive payment supra protest, the drawer and all indorsers are discharged from liability thereon.
he loses his right of recourse against any party who would have been
discharged by such payment. Sec. 189. When check operates as an assignment. - A check of itself
does not operate as an assignment of any part of the funds to the
Sec. 177. Rights of payer for honor. - The payer for honor, on paying credit of the drawer with the bank, and the bank is not liable to the
to the holder the amount of the bill and the notarial expenses holder unless and until it accepts or certifies the check.
incidental to its dishonor, is entitled to receive both the bill itself and
the protest.
XVII. GENERAL PROVISIONS
XV. BILLS IN SET
Sec. 190. Short title. - This Act shall be known as the Negotiable
Sec. 178. Bills in set constitute one bill. - Where a bill is drawn in a Instruments Law.
set, each part of the set being numbered and containing a reference
to the other parts, the whole of the parts constitutes one bill. Sec. 191. Definition and meaning of terms. - In this Act, unless the
contract otherwise requires:
Sec. 179. Right of holders where different parts are negotiated. -
Where two or more parts of a set are negotiated to different holders "Acceptance" means an acceptance completed by delivery or
in due course, the holder whose title first accrues is, as between such notification;
holders, the true owner of the bill. But nothing in this section affects
"Action" includes counterclaim and set-off;
the right of a person who, in due course, accepts or pays the parts
first presented to him. "Bank" includes any person or association of persons carrying on the
business of banking, whether incorporated or not;
Sec. 180. Liability of holder who indorses two or more parts of a set
to different persons. - Where the holder of a set indorses two or more "Bearer" means the person in possession of a bill or note which is
parts to different persons he is liable on every such part, and every payable to bearer;
indorser subsequent to him is liable on the part he has himself
indorsed, as if such parts were separate bills. "Bill" means bill of exchange, and "note" means negotiable
promissory note;
Sec. 181. Acceptance of bill drawn in sets. - The acceptance may be
written on any part and it must be written on one part only. If the "Delivery" means transfer of possession, actual or constructive,
drawee accepts more than one part and such accepted parts from one person to another;
negotiated to different holders in due course, he is liable on every
"Holder" means the payee or indorsee of a bill or note who is in
such part as if it were a separate bill.
possession of it, or the bearer thereof;
Sec. 182. Payment by acceptor of bills drawn in sets. - When the
"Indorsement" means an indorsement completed by delivery;
acceptor of a bill drawn in a set pays it without requiring the part
bearing his acceptance to be delivered up to him, and the part at "Instrument" means negotiable instrument;
maturity is outstanding in the hands of a holder in due course, he is
liable to the holder thereon. "Issue" means the first delivery of the instrument, complete in form,
to a person who takes it as a holder;
Sec. 183. Effect of discharging one of a set. - Except as herein
otherwise provided, where any one part of a bill drawn in a set is "Person" includes a body of persons, whether incorporated or not;
discharged by payment or otherwise, the whole bill is discharged.
"Value" means valuable consideration;

XVI. PROMISSORY NOTES AND CHECKS "Written" includes printed, and "writing" includes print.

Sec. 184. Promissory note, defined. - A negotiable promissory note Sec. 192. Persons primarily liable on instrument. - The
within the meaning of this Act is an unconditional promise in writing person "primarily" liable on an instrument is the person who, by the
made by one person to another, signed by the maker, engaging to terms of the instrument, is absolutely required to pay the same. All
pay on demand, or at a fixed or determinable future time, a sum other parties are "secondarily" liable.
certain in money to order or to bearer. Where a note is drawn to the
Sec. 193. Reasonable time, what constitutes. - In determining what
maker's own order, it is not complete until indorsed by him.
is a "reasonable time" regard is to be had to the nature of the
instrument, the usage of trade or business with respect to such
Sec. 185. Check, defined. - A check is a bill of exchange drawn on
instruments, and the facts of the particular case.
a bank payable on demand. Except as herein otherwise provided, the
provisions of this Act applicable to a bill of exchange payable on Sec. 194. Time, how computed; when last day falls on holiday. -
demand apply to a check. Where the day, or the last day for doing any act herein required or
permitted to be done falls on a Sunday or on a holiday, the act may
Sec. 186. Within what time a check must be presented. - A check
be done on the next succeeding secular or business day.
must be presented for payment within a reasonable time after its
issue or the drawer will be discharged from liability thereon to the
Sec. 195. Application of Act. - The provisions of this Act do not
extent of the loss caused by the delay.
apply to negotiable instruments made and delivered prior to the
taking effect hereof.
Sec. 196. Cases not provided for in Act. - Any case not provided for
in this Act shall be governed by the provisions of existing legislation
or in default thereof, by the rules of the law merchant.

Sec. 197. Repeals. - All acts and laws and parts thereof inconsistent
with this Act are hereby repealed.

Sec. 198. Time when Act takes effect. - This Act shall take effect
ninety days after its publication in the Official Gazette of the
Philippine Islands shall have been completed.

Enacted: February 3, 1911